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Made in China - revisited

When are Americans going to pay serious attention to China?

by Michael H. Thomson
October 24, 2007

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Made in China - revisited
When I wrote Made in China in December 2003 – almost 4 years ago, our trade deficit with that country was 121 billion dollars. Checking the latest figures through August of this year our deficit is 161 billion dollars. The only letter I received on that article was from a gentleman who disagreed on everything I said and blamed our economic woes on our own government spending. I didn't respond to the letter, mainly because it was written with such authority in economics that I didn't quite know how to reply. Economics was not my strong suit in college.
 
For the past five months, my house has been under renovation. Many materials have arrived here during this time – and you guessed it – the majority of everything from nails to light fixtures was made in China. Now you would be living in a closet with a bunch of mushrooms not to notice China events that have made the news recently.
 
First, there was the dog food and toothpaste crisis. The Chinese equivalent to our head of the FDA was executed over the manufacturing of fatal products that arrived in our imports from that nation.
 
Second, there was the recall of faulty tires. Another major Chinese trade bureaucrat commits suicide.
 
Now, there is a hullabaloo about toys. Our rug rats maybe chewing Chinese made toys that contain lead.
 
Despite this, our hunger for Chinese made goods goes unabated.
 
Leading economic authorities including our Secretary of the Treasury are worried about Chinese growth. I think they're not worried enough about it. The Bush Administration has never seen a foreign good that it didn't like.
 
In my 2003 article I pointed out that, the biggest beneficiary from the Chinese trade surplus was the Chinese military, namely the People's Liberation Army – the PLA. The percentage growth rate of the PLA exceeds the percentage growth rate of the overall Chinese economy.
 
People's Liberation Army is a misnomer. The PLA controls all the Chinese military forces including its Air Force and Navy. In September of this year, the commander of U.S. forces in Japan said that Chinese missile defense was almost impenetrable except to the most modern U.S. fighter aircraft.
 
This morning a lunar orbiting satellite was launched by the Chinese in their race to the Moon with other Asian powers. What is notable about this launch is a military test being conducted in conjunction with it. A Chinese nuclear submarine will attempt to maneuver the lunar satellite from the sea. As it develops this technology, China will soon be capable of destroying or manipulating satellites at will. Earlier this year China destroyed a weather satellite without notifying anyone. This sent shock waves through the Pentagon.
 
If China developed the capacity to cripple our satellite fleet, the devastation would be worse than Katrina or the California fires put together. TV, communications, weather forecasting, hospitals, much of our business infrastructure would be affected. If you want to know how much, start counting satellite dishes - personal and commercial on your way to work.
 
Last week our problems with China just got worse. The Chinese leader, President Hu Jintao was granted total control of the Chinese military. This is an unprecedented political move in China, one of the most drastic since the days of Chairman Mao Tse Tung. One man controls it all. For this to happen in the most populous country on earth is troubling, particularly since Chinese spying is on the increase.
 
We gradually slipped into this addiction with Chinese goods to the detriment of our own manufacturing processes. As with all addictions, withdrawal and rehabilitation are going to be a long painful process.
 
Until next time...
 
 
 
 
 
 
 

Comments (3)


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Melody Vanosdol from Cleves, OH writes:
October 24, 2007
I was not yet reading you articles back is Dec. 2003 or I believe I would have responded then.

I began boycotting Chinese products at the beginning of this year. This has indeed been painful. Some needs I have had to pay more for. Other things I have had to realize are not needs but wants and I can live without them.

It's not just the human rights issues and American jobs headed over seas for the cheap labor. I started before the product recalls and was quite glad of it. (I am still very concerned that we have no way of knowing what ingredients in our "American made" food comes from China.) I was sick of China taking over my life. Everything around me said "made in China."

This morning as I listened to the news of China's lunar satellite launch I wondered exactly what they were up to and hoped that we had people looking into every aspect of China's space program. I didn't know anything about the defense part of the mission until I read your article.

We have become so self absorbed that we often miss what is jumping up and down to get our attention. I hope it doesn't have to smack us in the face before we notice anything is going on. Our actions and collective greed do not give me encouragement.

God bless you.


Rick Wilson from Brewton, AL writes:
October 25, 2007
Mike,

The boycotting of all Chinese products, while commendable, is not feasible, such is our dependence on Chinese imports. Many years ago I was in a discussion with a Chinese exporter who introduced me to an influential leader of the Chinese foundry industry. This gentleman explained to me a plan that had been put into place many years previous. This plan involved the controlling of the metals industry on a world-wide scale. Chinese economists had determined that the basic economies of the world are moved forward through their metals manufacturing capabilities. No single sector of the economy is untouched by metals either through design, manufacturing, or transportation. The Industrial Revolution is a result of these ideals. By controlling the metals industry, China can control the economy of the world. Think about that.

If you look at the countries that lack forward economic motion, you will see people that do not make their basic metals needs. They are dependent upon other nations for these. Some, like Saudi Arabia, are lucky enough o be able to purchase their needs through oil. Most however, remain underdeveloped, impoverished nations unable to even manfacture the simpliest metal components. But purchasing your metals needs still makes you dependent and dependency on metals, like hard drugs, is how the pusher makes his money and controls his clientele.

Nations, like the United States, that are stupid enough to farm out their industrial and manufacturing sector to other countries, can actually move backwards economically as they become dependent upon other "manufacturing friendly" countries for their basic needs. Our liberal economists and idiot lawmkers refuse to understand this basic concept.

Once we lose our industrial sector, and it is coming fairly soon, we will become economic captives of the nations that provide these products to us. We will be controlled by them.

To test their theory, the Chinese government funded their metals industry. This allowed them to sell castings to the US for $0.25 pr pound while our cost was $0.75 per pound or more. Then they began buying up vast amounts of metal scrap. As a result, the price of scrap tripled for manufacturers in the US. Our cost of goods sold went up exponentially. We became even less competitive with the outside manufactureres and the world market in general. China got more business. Us manufacturers began to close down. Capacity shrunk as imports grew. We lost at least 1/3 of our foundries during this time, if not more.

Once we lost our ability to manufacture and compete, the Chinese were able to raise the price of their exports substantially, yet still maintained a solid cost savings over the US made goods because of the lost manufacturing capacity and high costy of doing business in the US. Instead of $0.25 per pound, these same metal parts now sold for over $0.55 per pound. We couldn't do anything about it except pass on the price to the consumer.
It will not end anytime soon.

Think about this hard fact. There is not one thing we use today that does not have a metal component involved in its manufacturing, either upstream or downstream. Metal components are the blood of the economy, not oil, lawyers, lawmakers, insurance or hamburger joints. A service economy, lauded by the Democrates with movie mogul Al Gore leading the parade, is doomed to servitude to the manufacturing nations.

Simply put, our ability to advance as the world's youngest economy to that of a world power was predicated upon our ability to be autonomous in manufacturing the stuff we needed in order to go places and do things. That's Economics 101. It's also power and stability. The loss of these will be devasting. Someone needs to wake up in Washington.







larry slay from Brewton, Al. writes:
October 25, 2007
Mike, great article! I can see where it would cause many of your readers unrest. May I suggest a prescription for that unrest, it is called the BIBLE. China, Russia, Gog and Magog, it is all there.

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